The draft Finance Bill clauses issued today confirm that the bereavement support payment (BST) which will supplant widowed parent’s allowance from 2016 will be tax-free.

At present, on the death of their spouse or civil partner before retirement age, the surviving spouse or civil partner with dependent children is entitled to an immediate payment of £2,000 and £111.20 per week until the youngest child leaves full-time education. Under the new arrangements to take effect from 2017, the survivor will receive an immediate payment of £5,000 and £400 per month for one year only – higher amounts, but of considerably shorter duration, particularly where the dependent children are still young.

Robin Williamson, Technical Director of LITRG, commented:

“It is of considerable concern to LITRG that the new bereavement support payment will be markedly less generous in the longer term than the present arrangement, particularly to families with young children. From that perspective, the fact that the payment will be tax-free in its entirety is at least something to be welcomed.”